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Novel bio-inspired environmentally-friendly process for producing durable and dimensionally-stable wood

Periodic Reporting for period 1 - SafeWood (Novel bio-inspired environmentally-friendly process for producing durable and dimensionally-stable wood)

Reporting period: 2016-03-01 to 2016-08-31

Wood is a natural, renewable, reusable and recyclable material, thus having enormous potential
to contribute positively to the EU’s 2050 goals, by enabling a high standard of living from lower
levels of energy and resource consumption. Wood is the main source of financial revenue from
forests, which cover over 40% of the EU’s land area and provide around three million jobs.
Although globally forest area continues to decrease, currently in the EU, only 60–70% of the
annual increment is being cut, whilst providing around 430 million cubic metres per annum of
timber resources. Consequently, European softwood is a sustainable resource, in contrast to
imported tropical hardwoods.

To ensure a long and useful life in many end-use situations, timber—especially softwoods
– needs protection from the hazards of fungal decay and weathering. The current approach to
wood preservation is based on the principle of toxicity. Wood impregnation with biocides (containing
creosote, arsenic, zinc, copper, chromium, etc.) prevents biological degradation, but
the European directive on the use of biocides place severe restrictions nowadays on the active
substances that can be used in wood preservation, above all arsenic, and their fields of application.
Wood treated with such preservatives is classified as hazardous waste. Furthermore,
current treatments don’t have positive contributions to other critical properties of wood, such
as dimensional stability or water absorption.

Recent research demonstrates that antifungal components and hydrophobic extractives produced
by trees themselves can be effectively used as environmentally-friendly wood preservatives.
Such extracts are readily available as a by-product of the paper industry. Our SAFEWOOD
bio-inspired approach is based on wood preservation as trees do it, the novel preservation
process, in effect, converting sapwood to have characteristics of durable heartwood.

Within this SME Instrument Phase 1 project, a feasibility study has been undertaken to evaluate
and analyse the potential of the innovation. This has been based on extensive investigation
to support the process of decision making and define the business plan for reaching the targeted

The overall conclusion from this study is that it is highly worthwhile to bring SAFEWOOD
to market. The next step in this process will be to submit an SME Instrument programme
Phase 2 application, which will be based on the positive results of the feasibility analysis and
business plan resulting from this study.
The work of this SME Instrument Phase 1 project has involved eight tasks, the results being
briefly summarised as follows.

Task 1 of the study involved development of a detailed businessmodel (BM) for exploitation
of the SAFEWOOD results based on the approach proposed by Osterwalder. This approach
encompasses work of previous authors by identifying nine basic model building blocks that,
considered together, can adequately describe the main characteristics of a business model.
These identify
• Key partners,
• Key activities,
• The Value Proposition,
• Customer Relationships,
• Customer Segments,
• Key Resources,
• Channels,
• Cost Structure, and
• Revenue Streams.

From this starting point, a SWOT analysis was then undertaken to identify
• Strengths (characteristics of the business or project that give it an advantage over others),
• Weaknesses (characteristics that place the business or project at a disadvantage relative
to others),
• Opportunities (elements that the business or project can exploit to its advantage), and
• Threats (elements in the environment that could cause trouble for the business or project).

Within Task 2 of this study, the market opportunities and user requirements for safe and
environmentally-friendly wood preservatives have been evaluated in detail, based on literature
and patent searches, personal interviews and questionnaires involving a broad range of
stakeholders. These have involve both end-users of protected wood and companies operating
sawmills and/ or existing wood impregnation plants.

Using the identified user requirements from Task 2 as an input, the work of Task 3 of the
study has developed requirements and specifications for wood preservatives based on natural
wood extractives and the associated impregnation process. The feasibility of implementation
of each aspect has been considered in relation to the associated effort and cost to adapt results
of previous work and develop the overall up-scaled commercialised solution. This work has
included practical tests to determine the potential for further optimising process parameters
and tall oil usage. These activities have resulted in definition of the detailed programme of
work and estimated budget for the Phase 2 project.

Task 4 had the objective of identifying key partners for further development and commercialisation
of SAFEWOOD. In the course of the study, a large number of organisations have
been consulted, both in relation to the market study of Task 2 and with the objective of identifying
the most appropriate partners for collaboration in the Phase 2 project as the system is
up-scaled and brought to market. These organisations, encompass both large and small companies,
academic and other research organisations and trade associations.

Within Task 5 of the study, identified revenue streams, together with associated projected
costs have been integrated. This process has enabled financial ratios and investment indicators
to be quantified. The results have been used as an input to Tasks 7 and 8 to define the
comprehensive business plan including feasibility analysis.

Based on consideration of alternative protection mechanisms in Task 6 of the study, a strategy
has been developed for protection of the SAFEWOOD Intellectual Property (IP), including
that expected to result from the Phase 2 project.

Integration of the preceding tasks within tasks 7 and 8 of the study has resulted in a feasibility
report detailing the methodology used, the evaluation criteria, the study findings and recommendations.
The market, technical, business, and economic and financial model viabilities
have each been critically appraised in the study process.

The developed detailed business plan encompasses all aspects of the business planning
process declaring vision and strategy alongside sub-plans covering Intellectual Property (IP)
management, marketing, finance, operations and risk assessment, i.e. effectively providing a
summary of these disciplinary plans.

Insignia offers wood processors the opportunity to produce and supply a viable, environmentally-
compatible, safe and sustainable alternative to tropical hardwoods and to compete
with wood impregnated with hazardous chemicals. For manufacturers of wood products, SAFEWOOD
enables the production of a diverse range of added value, high quality, reliable, dimensionally
stable and durable end-products for outdoor use — it is a product that enables differentiation
from the rest of the market.

Insignia will launch the SAFEWOOD solution in Scandinavia and the Baltic States, where
3.2 million cubic metres of impregnated wood is currently consumed per annum. This is
used in a diverse range of applications; for example, in Sweden alone, around 400,000m3
of impregnation-protected wood is sold annually as weather-boarding.

The overall European market for impregnated wood is estimated as being 6.5 million m3
per annum, of which around half corresponds to that used in the targeted sectors. In collaboration
with licensees in each country represented, Insignia expects to capture at least 3.5% of
this market (114,000m3) within 5 years following the launch of SAFEWOOD, rising to 7.0%
(226,000m3) after a further 3 years.

Insignia will derive income in the following ways:
• Margin on sale of production plants to process licensees. The plant will be manufactured
and installed by subcontractors to Insignia designs.
• Income from licensees based on their annual production. A 6% charge has been assumed.
• Additional revenue is also expected to result from sales of tall oil to licensees of the
production process. (This possible contribution has not been included in the current
business projection analysis.)
• Income from Insignia’s own-operated SAFEWOOD plant and production of value-added

Subsequently, SAFEWOOD will be rolled out across Europe and on a global basis via expansion
of the network of licensees operating the process and marketing safe and environmentallyfriendly
wood and associated end-products/ applications. This will result in a multiplicative
effect on the revenue stream from additional licensee start-up franchise and production plant
sales, together with revenue from ongoing operation of existing plants.

Insignia does not intend to reach its ambitious growth targets alone. Our strategy depends
on a partnership concept where licensing is at the core — the long-term objective being to
build a world leading materials brand based on sound technology, manufacturing excellence,
global sales and distribution, marketing and logistics. This holistic approach will enable all
participants to achieve superior returns on their investment. The local licensee will manufacture,
market and sell durable and stable wood materials and associated products in their own
markets, but also benefit from Insignia’s global sales and marketing initiatives to markets that
increasingly source globally. The ultimate goal is to establish SAFEWOOD as a market leader
both in geographical markets and specific segments.

Based on development and upscaling of the existing pilot plant, Insignia will operate its own
impregnation plant with objective of benefiting from first-hand ongoing experience in process
characteristics. This plant will be used for optimising the integrated process. In collaboration
with product manufacturing partners, SAFEWOOD produced in this plant will be used to construct
a wide range of example products as references for applications of the impregnated wood.

Insignia’s technology and production set-up will facilitate licensing. The integrated process
—designed with licensing in mind—will undergo thorough internal and external testing, such
that it is ready to be replicated by licensees. Insignia will invest considerably in building the
SAFEWOOD brand. At the same time we shall be working continuously with optimising production
processes and quality assurance. Thus, both branding and technology together form
vital elements of Insignia’s immaterial assets of the licensing platform. For a licensee, this ensures
reproducibility of product quality and thereby access to our global project sales. Partners
will also benefit from global marketing efforts, as well as PR in local markets, since the products
will meet the same standards irrespective of production site. Partners may also sell beyond
their own capacity by calling on supply from other SAFEWOOD partners around the world. Insignia
is seeking licensing partners who share our values of providing environmentally-friendly,
safe and sustainable wood to the world.

Since potential licensees of the SAFEWOOD process and early adopter end-users of the
protected wood will be involved in specification and evaluation throughout the Phase 2 project,
it is expected that it can be quickly brought to market i.e. within around six months following
completion of the project.

Growth in take-up of SAFEWOOD will be limited only by the S-shaped curve which applies
for introduction of new technologies, with a slow initial acceptance followed by an accelerating
pace. Insignia is conservatively targeting a revenue stream of 5.2M euro per annum within
5 years from completion of the Phase 2 project, growing to 7.0M euro after a further 3 years,
leading to the creation of around 35 jobs, together with additional employment opportunities
for subcontractors and licensees of the technology.

The Return on Investment for Insignia, including costs for both bringing the production
process to market in the Phase 2 project and investment in the first production-scale plant, is
estimated at around three years, corresponding to just one year from completion of the Phase 2
project. The payback period for licensees investing in plants will be just as rapid. Cost of plants
are estimated at 54 euros per cubic metre of annual production capacity; based on a 10 years
period of use, the corresponding depreciation is 5.40 euros/m3 per year. Since the process will
add value of at least 100 euros per m3 compared to untreated timber, licensees can expect a
payback of less than a year.
Progress beyond the state of the art

It should be appreciated that this is a feasibility study, not an R&D project. Consequently,
the current study, in itself, did not have the primary objective of advancing the state of the art.
Nevertheless, aspects of the work have related to advancement of the state of the art.

Within Task 3, tests have been undertaken to investigate the effect of various parameters of
the SAFEWOOD process. In particular, sequencing of temperature and pressure for the overall
process has been investigated. These tests indicated that, before starting the pressure stage, it
is best that wood is heated so that at least part of its inner parts heat to a temperature of at
least 100°C. It has been established that applying heat in this way greatly facilitates penetration
of the preservative within the wood because, as the temperature rises, the viscosity of the tall
oil-based preservative decreases.

Another important aspect of the process is that wood is also heated by means of vapour
during the vacuum stage after the pressure impregnation. In this way, it has been found that it
is possible to decrease the amount of wood preservative remaining on the surface layer of wood
after the pressure stage, facilitating washing the surface of wood clean and avoiding staining
before subsequent use of the wood. Furthermore, a 12% saving in tall oil usage is achieved.

The overall process cycle time is 23 hours. Although this is acceptable, it is considered that
it can be reduced to around 18 hours with further optimisation of the process in the Phase 2 project.

As a further technical development, it is proposed that the programme of work for the
Stage 2 project will include development of an advanced system for monitoring and control of
the impregnation process. The approach will be based on chromatic signal processing. This
involves application of novel signal processing techniques that have been successfully used in
various industrial monitoring and control applications. The novelty of the approach involves
determining the stage of completion of a complex process by interpreting measurements obtained
from a limited number of sensors providing parameters indicative of the process. In the
case of the SAFEWOOD process, sensors can include, for example, load cells that indicate the
weight gain of wood during impregnation by the tall oil.

Although the approach is already well proven, having been successfully used in a diverse
range of industrial control applications, it will be the first time that it has been applied in a
timber impregnation process. Consequently, it is considered that this aspect will also result
in intellectual property that will be the subject of an additional patent. The innovation, i.e.
the proposed patent, can be generalised to relate to monitoring and control of processes for
impregnation of wood with any type of preservative.

Socio-economic impacts

Insignia offers wood processors the opportunity to produce and supply a viable, environmentally-
compatible, safe and sustainable alternative to tropical hardwoods and to compete with
wood impregnated with hazardous chemicals. For manufacturers of wood products, SAFEWOOD
enables the production of a diverse range of added value, high quality, reliable, dimensionally
stable and durable end-products for outdoor use — it is a product that enables
differentiation from the rest of the market.

The overall European market for impregnated wood is estimated as being 6.5 million m3 per annum,
of which around half corresponds to that used in the targeted sectors. In collaboration
with licensees in each country represented, Insignia expects to capture at least 3.5% of
this market (114,000m3) within 5 years following the launch of SAFEWOOD, rising to 7.0%
(226,000m3) after a further 3 years.

Benefits of SAFEWOOD compared to existing approaches for wood protection include:
• The process is environmentally-friendly, not involving use of biocides.
• The process is applicable to a wide range of wood types.
• In addition to protecting the wood, dimensional stability is improved.
• Strength of wood is maintained and colour is unchanged.
• The alternative thermally-modified wood process impacts on strength and colour of
treated wood, whilst being of higher cost.
• Wood treated by the SAFEWOOD process has been positively evaluated by wood-product
manufacturers and end-users.

SAFEWOOD provides numerous socio-economic benefits, which can be briefly summarised
as follows:
• EU directives and national regulations are restricting usage of hazardous biocide based
preservatives, thereby creating a demand for environmental-friendly alternatives.
• Crude tall oil, a by-product of the paper industry, has no other uses, is available in large
quantities and at low cost.
• Increasing prices and restricted availability of non-sustainable tropical hardwoods.
• Increasing recognition of the importance of end-of-life recyclabiity/ reuse of preserved